SK On, the South Korean electric vehicle (EV) battery manufacturer with a prominent presence in North America, including clients such as Ford, Hyundai, and Volkswagen, announced on Tuesday a significant agreement with Colorado-based graphite producer Westwater Resources. The deal entails the supply of up to 34,000 tons of crucial graphite, a vital component in EV batteries, to SK On's manufacturing plants in the United States. This strategic partnership marks a crucial step for SK On as it fortifies its supply chain and expands its production capacity in North America.

Under the terms of the agreement, SK On will procure natural graphite processed at Westwater's facility in Kellyton, Alabama, for the duration spanning from 2027 through 2031. This steady supply of graphite is essential for SK On's battery manufacturing operations, as graphite serves as the primary material in the anode of lithium-ion batteries. Often outweighing other components such as lithium, cobalt, and manganese, graphite plays a pivotal role in ensuring the performance and efficiency of EV batteries.

The agreement comes at a time when SK On is ramping up its manufacturing capabilities in North America, aiming to capitalize on various incentives, including those provided under the Inflation Reduction Act. This strategic move aligns with SK On's broader objectives of enhancing its presence in the region and fostering sustainable growth.

Notably, this collaboration builds upon a previous agreement between SK On and Westwater, forged last year, which focused on the joint development of environmentally responsible and high-performance anode materials. This collaborative effort sets a precedent for future partnerships between the two companies and underscores SK On's commitment to innovation and sustainability in battery technology.

SK On currently operates two EV battery plants in Commerce, Georgia, strategically located to supply Volkswagen and Ford. Additionally, through its joint venture with Ford Motor Co. named BlueOval SK, SK On plans to establish three additional battery plants, with two in Kentucky and one in Tennessee. Furthermore, SK On's partnership with Hyundai entails plans to inaugurate another battery plant in Georgia, further solidifying its foothold in the region.

The recent agreement with Westwater Resources is a testament to SK On's proactive approach in securing robust and reliable supply chains for critical battery materials. With increasing pressure on North American battery manufacturers to reduce dependency on overseas sources, particularly China, partnerships like these are instrumental in bolstering domestic production capabilities.

China's dominance in global anode production and graphite processing underscores the urgency for North American manufacturers to diversify their supply chains. Recent restrictions imposed by China on graphite exports have further emphasized the need for alternative sources of this vital material.

Westwater Resources holds mineral rights to explore and potentially mine a substantial graphite deposit spanning 42,000 acres in Coosa County, central Alabama. This domestic resource presents a significant opportunity for SK On to reduce reliance on foreign imports and establish a sustainable supply chain within the United States.

The agreement between SK On and Westwater Resources comes on the heels of a similar collaboration between Japanese battery cell manufacturer Panasonic Energy and Novonix Ltd. for the supply of synthetic graphite for North American operations. These partnerships underscore the industry-wide effort to enhance domestic manufacturing capabilities and reduce dependency on foreign sources of critical battery materials.